Ford's Auto Show Stunner

The first of two press days at the North American International Auto Show is just getting under way as I write this, but Ford (NYSE: F  ) has already made big news -- on a somewhat surprising front.

Sure, it was great that the all-new Explorer won North American Truck of the Year honors, but that wasn't a huge surprise. Nor was last Friday's revealing of the Focus Electric particularly shocking (so to speak), because we had been expecting Ford's first mass-market all-electric car for some time.

And it wasn't much of a surprise to hear the company announce an expanded range of compact cars (including a cool mini-minivan and new hybrids) that will use the platform underpinning the all-new Focus. It fits perfectly with both CEO Alan Mulally's "One Ford" global strategy and Executive Chairman Bill Ford's long-standing push toward a greener era for the Blue Oval.

But when Ford President of the Americas Mark Fields said that the company would be adding more than 7,000 jobs in the U.S. over the next two years, that turned some heads.

Are we sure this is a good idea?
As a Ford shareholder, my first reaction was probably a lot like yours -- the company just spent years reducing capacity and getting its costs under control, and now it wants to expand? But on reflection, this is good news (and not just for the Midwest's unemployment rate). Consider:

  • Maxing out existing capacity. How do you maximize production in an auto factory? Run it all day and all night, using multiple shifts of workers. Ford's sales have been climbing for months, demand is strong, and adding shifts is (much) cheaper than adding factories.
  • Beefing up product and technology development. Ford hasn't been specific about exactly what positions it'll be offering, but the company did say that about 750 of those new jobs would be salaried positions. Ford's aggressive technological push has been well-documented, and its need to maintain a high new-product tempo obvious. It's reasonable to assume that the company will be hiring engineering talent as part of its investment in those efforts.
  • Lower-cost workers. The Detroit automakers' landmark deal with the United Auto Workers in 2007 introduced a "two-tier" wage system. Under the deal, which was intended to help the U.S. automakers become more competitive with foreign rivals, newly hired union workers will be paid $14 to $15 an hour, about half the rate of older workers.

So yeah, at least until we have more details about these hiring plans, I'm thinking that this is good news, and not just for Ford.

Ford's other big news
As I said above, there's still lots to come at the big auto show in Detroit (and at subsequent shows in Chicago and New York, also regular sites for major announcements from the automakers). But what we've seen from Ford so far is worthy of note:

  • The Focus Electric. Like many "green" cars, the electric version of Ford's new Focus sports a distinctive look, in this case a unique front end somewhat reminiscent of the upcoming Model S from Tesla Motors (Nasdaq: TSLA  ) . But the Focus Electric isn't exactly a Model S competitor -- it's smaller and less expensive, for one thing, and expected to have a shorter range (probably about 100 miles, though Ford hasn't yet given a number).
  • An expanded range of small green cars. The Focus Electric is just one part of Ford's plan for the platform underpinning the new Focus compact. Not only will the Focus itself be available with four different powertrain configurations (gas engine, conventional hybrid, plug-in hybrid, all-electric), but other models will follow: The C-MAX, a small minivan already popular in Europe, and the Vertrek, officially a "concept" but likely to be the successor to the Escape SUV here in the U.S. as well as the similar-but-different Kuga SUV sold abroad. As with the Focus itself, which is the global successor to two similar but different models, the Vertrek (which may or may not keep that name) is another step in implementing the "One Ford" consolidation strategy.
  • More hybrids. While the company is still in wait-and-see mode with respect to the market for purely electric cars (hence the four drivetrains for the Focus), Ford has put big resources into hybrid development, announcing that the C-MAX will be available in both conventional hybrid and plug-in versions.

See a theme here? Ford is obviously out to beat Toyota (NYSE: TM  ) and Honda (NYSE: HMC  ) on quality and efficiency in the categories it sees as the future of autos, at least over the near term -- and to maintain its lead over a General Motors (NYSE: GM  ) that is finally showing signs of gathering steam. But each of those companies will have surprises of its own as the auto show season continues to unfold.

Want to read more about Ford? Add it to My Watchlist, which will find all of our Foolish analysis on the company.

Fool contributor John Rosevear owns shares of Ford and General Motors. Ford is a Motley Fool Stock Advisor recommendation. General Motors is a Motley Fool Inside Value choice. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On January 10, 2011, at 9:46 PM, baldheadeddork wrote:

    Good piece, John.

    I think the C-Max Energi is going to be remembered as the sleeper story of this Detroit show. This is an on-the-cheap Volt, but I think that can be a great thing. If it comes in at the price of the Leaf and has the flexibility of the Volt it's going to be a home run.

    (And with the C-Max Hybrid it gives Ford two launches for next year.)

    Since you brought up the show...

    What was the response to the 2012 Civic prototypes? I was underwhelmed. It looks like a cross between the current Civic and the Accord, which may be a lot of things but beautiful ain't one of them. It's not as conservative as the Cruze but it's not going to stand out with the Focus and Elantra.

    Did VW really brag about slashing $7K of content out of the new Passat while making it bigger? I wrote on Jalopnik that it seems VW is rushing into the void left when Chrysler took the 200 upmarket.

    I saw Toyota's little promo piece asking the plural for Prius. Judging by the Prius V, I think the most common answer will be "There's more than one?" Does the Prius V really look like it has a beak when viewed from the side? The current Prius is actually a decent looking car, but it's not translating to the V or the Prius C concept. I'm also skeptical either will pull in people who weren't going to buy a Prius anyway.

    The Chevy Sonic is hideous. Looks like a Chinese knockoff of a Focus or Elantra.

    And the Porsche 918 - just perfect. Drop the hybrid and get this into production now.

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